Tech giants fall late on Micron outlook: markets retreat

(Times Of Update) — Tech giants took a hit in late U.S. trading after Micron Technology Inc.’s outlook failed to meet lofty industry expectations that fueled the stock bull market.

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A $285 billion exchange-traded fund that tracks the Nasdaq 100 Index (QQQ) fell after the computer memory chip maker forecast sales below some investors’ estimates. Micron collapsed late in the day, dragging down some chipmakers, including giant Nvidia Corp. Also after Wall Street closed, the Federal Reserve said America’s largest banks had passed the annual stress test, paving the way for higher payouts to shareholders.

The market’s recent attempt to expand the mega-cap group was short-lived, with a host of metrics further showing how weak the market’s breadth remains, reinforcing uncertainty over the sustainability of the rally. The bifurcation between performance and magnitude of the S&P 500 has reached one of the worst levels in three decades, according to Times Of Update Intelligence.

“The stock market is way too reliant on big tech — period, end of story,” said David Bahnsen of the Bahnsen Group. “Whether last week’s volatility in the tech sector is the beginning of something deeper or whether that reckoning is still to come remains to be seen, but excessive investor sentiment, euphoria and excessive momentum always end up the same thing.”

The S&P 500 rose slightly to around 5,480 points. FedEx Corp. surged on bullish forecasts and buyback plans. Amazon.com Inc. reached a valuation of $2 trillion, a rise that propelled the e-commerce giant deeper into record territory.

Yields on the 10-year Treasury rose above 4.3%. A $70 billion sale of five-year notes showed signs of good demand. The dollar reached its highest level since November. The fall of the yen to its lowest level since 1986 increases the risk of intervention.

“The market’s ‘check engine light’ is on as we head into the hot summer months,” said Craig Johnson at Piper Sandler. “Investors in technology-heavy indices experience FOMO, while investors in the rest of the market experience ROMO (regret of missing out), as overall market breadth remains low outside of a handful mega-cap stocks.”

The S&P 500 is on track for a strongly positive performance for the first six months of the year, fueled by a rally by the market’s biggest names. Dividing the index’s 500 stocks by capitalization quintiles shows a consistent performance pattern: the bigger the stock, the better it has performed, according to Jack Ablin at Cresset.

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“Much of the divergence is attributable to a ‘higher and longer’ interest rate environment,” Ablin noted. “Investors believe that large-cap technology companies – thanks to their ability to generate cash – are less dependent on borrowing and that companies that need to borrow have much easier access to capital than their smaller sisters . So where are the markets heading in the second half of 2024? »

Ablin expects U.S. stock markets to widen later this year due to the possibility of a decline…